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Epic plots further growth in recovering LPG market

Gas specialist open to absorbing more secondhand units for greater global presence

Charles Maltby has a preference for secondhand tonnage and merger-and-acquisition activity as Epic Gas looks to continue its expansion efforts.

LPG specialist Epic Gas has bought 17 newbuildings and 10 secondhand vessels during the past four years as it shifted from being a regional player in South East Asia to the global stage.

These ships have been secured in single vessel buys, enbloc transactions and M&A deals. “I think all of those options remain open to us into 2018 and 2019,” Epic chief executive Maltby told TradeWinds.

However, he said newbuilding buys are less likely given the ships are now “relatively expensive” at 15% to 20% more than the ships the company has built in the past four years.

He cites the value of the Japanese yen relative to the US dollar and increased technical requirements as contributors to yard prices moving upwards.

“We are watching the secondhand market and vessels that are on the water right now,” Maltby said.

Epic now has a fleet of 39 vessels in an improving market and the executive said further purchases can be easily slotted into the company.

“That [scale] means we have the ability to absorb more ships very easily,” he said. “Running these vessels is technically quite complicated. You need a very high standard of vetting for oil major approvals and you are in and out of port every six days on average, as we are doing 2,400 port calls a year.

“For us, it is easy to pick up vessels and add them into our fleet and into our platform. Now we have the global platform in place, it’s relatively easy to grow from here.”

Maltby casts net wide for Epic to upgrade Merkur listing

During the past few years, Epic has also sold a number of older smaller ships. While one ship on bareboat charter could possibly be returned to its owner later this year, Maltby does not have further disposals in mind. “No, it’s time to trade and make some money,” he said.

Last week, Epic reported a loss of $2.7m in the first quarter of 2018, down from red ink of $3.4m at this stage in 2017. Revenue came in at a record $38.6m.

Rates for smaller LPG ships have recovered to stable levels, with the larger ships expected to follow in the next 12 to 18 months.

“The cover we have is over $1,000 per day higher than we had last year,” Maltby said. “That is obviously a good sign that the market has moved up and the cover we continue to place on the fleet continues to average up the TCE [time charter equivalent] of the forward earnings.”

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Epic plots further growth in recovering LPG market

Gas specialist open to absorbing more secondhand units for greater global presence

Charles Maltby has a preference for secondhand tonnage and merger-and-acquisition activity as Epic Gas looks to continue its expansion efforts.

LPG specialist Epic Gas has bought 17 newbuildings and 10 secondhand vessels during the past four years as it shifted from being a regional player in South East Asia to the global stage.

These ships have been secured in single vessel buys, enbloc transactions and M&A deals. “I think all of those options remain open to us into 2018 and 2019,” Epic chief executive Maltby told TradeWinds.

However, he said newbuilding buys are less likely given the ships are now “relatively expensive” at 15% to 20% more than the ships the company has built in the past four years.

He cites the value of the Japanese yen relative to the US dollar and increased technical requirements as contributors to yard prices moving upwards.

“We are watching the secondhand market and vessels that are on the water right now,” Maltby said.

Epic now has a fleet of 39 vessels in an improving market and the executive said further purchases can be easily slotted into the company.

“That [scale] means we have the ability to absorb more ships very easily,” he said. “Running these vessels is technically quite complicated. You need a very high standard of vetting for oil major approvals and you are in and out of port every six days on average, as we are doing 2,400 port calls a year.

“For us, it is easy to pick up vessels and add them into our fleet and into our platform. Now we have the global platform in place, it’s relatively easy to grow from here.”

Maltby casts net wide for Epic to upgrade Merkur listing

During the past few years, Epic has also sold a number of older smaller ships. While one ship on bareboat charter could possibly be returned to its owner later this year, Maltby does not have further disposals in mind. “No, it’s time to trade and make some money,” he said.

Last week, Epic reported a loss of $2.7m in the first quarter of 2018, down from red ink of $3.4m at this stage in 2017. Revenue came in at a record $38.6m.

Rates for smaller LPG ships have recovered to stable levels, with the larger ships expected to follow in the next 12 to 18 months.

“The cover we have is over $1,000 per day higher than we had last year,” Maltby said. “That is obviously a good sign that the market has moved up and the cover we continue to place on the fleet continues to average up the TCE [time charter equivalent] of the forward earnings.”